Practice Guidance 8: Disclosure on Remuneration
A company's annual remuneration report should form part of, or be annexed to, the company's annual report. It should be the main means through which the company reports to shareholders on all forms of remuneration and other payments and benefits, for directors and key management personnel (KMP), from itself and its subsidiaries, in respect of the financial year reported on. Companies should make the disclosure regardless of whether shareholder approval has been obtained.
Remuneration disclosures for individual directors and the Chief Executive Officer (CEO) should specify the names, amounts and breakdown of remuneration.
Remuneration disclosures for at least the top five KMP (who are not directors or the CEO) should specify the names, amounts and breakdown of remuneration in bands no wider than S$250,000 (refer to illustrative examples below).
A breakdown (in percentage terms) of the remuneration earned by each director, the CEO and each of at least the top five KMP (who are not directors or the CEO) should include base/fixed salary, variable or performance-related income/bonuses, benefits in kind, stock options granted, share-based incentives and awards, and other long-term incentives. The disclosures on employee share schemes should cover the important terms such as the potential size of grants, methodology of valuing stock options, exercise price of options that were granted as well as outstanding, whether the exercise price was at the market or otherwise on the date of grant, market price on the date of exercise, the vesting schedule, and the justifications for the terms adopted.
In addition to the disclosure in aggregate of the total remuneration paid to at least the top five KMP (who are not directors or the CEO), the aggregate amount of any termination, retirement and post-employment benefits that may be granted to directors, the CEO and at least the top five KMP (who are not directors or the CEO) should be separately disclosed. In the case of a company with less than five KMP (who are not directors or the CEO), it is acceptable for the company to make the disclosure in respect of all KMP, with the appropriate explanation.
For administrative convenience, the company may round off the disclosed figures to the nearest thousand dollars. The disclosure of remuneration may be in bands no wider than S$250,000 for at least top five KMPs; and no wider than S$100,000 for employees who are substantial shareholders, or are immediate family members of a director, the CEO or a substantial shareholder.
Illustrative Examples of Banding:
A company has five KMP: V, W, X, Y and Z. The KMPs' remuneration are as follows: V is paid S$300,000; W is paid SS300,000; X is paid S$540,000; Y is paid S$650,000; and Z is paid S$1,005,000.
|Applicable bands||Top 5 KMP|
Disclosure of Relationships between Remuneration, Performance and Value Creation
To facilitate better understanding of the relationships between remuneration, performance and value creation, companies should adopt and disclose the following information: